economic evidence and reasoning used by the ITC and the ITA in the United
States and the Canadian International Trade Tribunal and Revenue Canada
in Canada and to overturn a decision if it rules that such reasoning is faulty.
Thus it becomes essential that members of the binational Dispute Panels be
provided with the opportunity to address the economics of trade remedy law
cases by appealing to the Dispute Panel process any case where the economic
evidence appears suspect. The provisions of Chapter Nineteen of the FTA
permit such a substantive review when there is an appeal based on the
concern that a grievous error has been made in the application of U.S. or
Canadian trade remedy law by the administrative agency responsible. It is
hoped that the administrative agencies in Canada, and particularly in the United States feel the increased pressure of Dispute Panel review, thereby
improving the economic content of their "unfair" trade law cases. This is
critical for decisions concerning the ITC, where a 3-3 vote counts as positive.

If the members of the Dispute Panels are given the opportunity by
complainants to address the economic substance of the administrative agencies' decisions in Canada and the United States, it is likely that the agencies
will adjust to the new situation and revert to more objective and economics-
based assessments of "material injury" and the calculation of the dumping or
subsidy margin where they have not been doing so.
21 It may also help in the
long run to encourage the administrative agencies in both countries to shape
up in their decisions affecting other nations. In this way, the Canada-U.S.
FTA and its new Dispute Panels may end up doing the world trading
community an important service.

In Chapters 5 and 6, the results of the Chapter Nineteen Dispute and Chapter Eighteen Arbitration Panels over the January 2, 1989 to August 15,
1994 period are assessed in an economic framework to see what, if any,
weaknesses in the actual implementation of the panels are present and how
in the future the Canadian and U.S. governments might strengthen the
effectiveness of these DSMs.

Parts of this chapter were taken and revised from an article initially published
by Andrew D. M. Anderson and
Alan M. Rugman ( 1989), "The Canada-U.S. Free
Trade Agreement: A Legal and Economic Analysis of the Dispute Settlement Mechanisms," World Competition: Law and Economics Review, Vol. 13, No. 1:43-59. Permission granted for reproduction of the material.

Over the 1980-1988 period, 16 of 20 preliminary CVD cases were positive, an
80 per cent affirmative rate, while 19 of 25 AD cases were positive, a 76 per cent
affirmative rate, for an average CVD and AD preliminary positive rate against Canada of 78 per cent. Twenty-six of a total of forty-five CVD and AD cases were
positive in the final decision against Canada, a 58 per cent affirmative rate. See Table
2.11 in Chapter 2.

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